Read the latest from Randal Hines on the world’s ongoing financial crisis, and how looking to the past might help with a solution for the future:

“Those who enjoy watching train wrecks will find this column richly rewarding. As the financial press worries over the U.S. debt crisis, the E.U. collapse, Italian political revanchism, and recessions in China and Brazil, a new star may be added to the worry list:

The world’s third largest economy, once nominated to overtake the U.S. by now, Japan’s economy has stumbled badly, and is likely to get worse before it jumps off its own “cliff”. This might, perversely, give central banker’s pause for cheer. After all, some central bankers can recall 1985 as though it were yesterday.

In 1985, the finance ministers of the world’s five biggest economies convened at the Plaza Hotel in New York City to finalize and sign the Plaza Accord, an agreement to devalue the U.S. Dollar against the Japanese Yen and German Deutsche Mark. Prior to the Plaza Accord, the dollar had appreciated approximately 50% against the Yen, D-Mark and British Pound. The coordinated devaluation of the Rockefeller CenterDollar was meant to kick-start the U.S. economy, which was struggling with a large current account deficit, an overvalued currency and an economy still struggling to get back to full unemployment in the wake of the early 1980’s recession.

The Accord was a success and achieved a multitude of firsts. It was the first time central bankers agreed to intervene in the currency markets, the first time the world set interest rate targets and the first time each of the G-5 nations agreed to adjust their own economies. In other words sovereignty was exchanged for globalization. Most importantly, it avoided a chaotic currency war.”